jakiro
Author: YettaS Source: X, @YettaSing
“Yetta, are you anxious about this kind of market now?” This was a question from someone who asked me seriously at a dinner party. I was stunned at first, not understanding why I think we should be anxious, “because many people think meme is popular and popularVC coins are going to die haha.”The biggest discussion of Devcon this time is indeed on Meme. The peers all joked that the first level of delay in speculation of meme, and some people would also ask whether we included meme in asset allocation.
To be honest, we were not very anxious, or we probably expected this situation at the beginning of the year.Primitive is an evergreen fund without external funds, which allows us to look at the industry in a long time dimension.We also do not have the pressure to deploy funds, and we do not need to explain to LPs who do not understand our industry for the purpose of raising funds. The reason we invest in any track (many times LPs are a huge pressure). Everything we do is followWith your curiosity, learn about the value of this industry and where the talent flow is.
In the market of crypto, a primary and secondary and secondary bubbles, the definition of VC is closer to its essence: bet on things withventure return.Follow any ideology or participation in any political struggle is meaningless, and learning from the market is the key.
1. First, let me talk about our understanding of structural changes in the industry
At the beginning of this year, we conducted a lot of reviews on the changes in the industry structure and wrote this internal report “Cycle of Front Running”, TLDR:Our industry is becoming more and more polarized.On the one hand, the industry has grown larger, and tradfi has integrated a large number of crypto assets into Wall Street through compliance means such as ETFs. This part of the liquidity has been stolen and it is difficult to convert it into our on-site funds; on the other hand, populist capitalismWith strong expansion, the attention economy further compressed, the entire financialization process became more simple and crude, and the most crypto-native method became directly speculation of meme, which is also an area that tradfi cannot reach.
In such a macroeconomic and social context,The liquidity in the field is constantly decreasing.In the past, we said that barbellstrategy hoped that both ends could be integrated, but the opposite result was that our polarization became more and more intense.As a result, the intermediate state of our industry is becoming increasingly difficult.
Who are these intermediate states? All institutions that have gained dividends due to the grassroots era.Offshore CEX, trading firm, crypto financial service providers, and VCs cannot be avoided.
This structural change will make offshore CEX anxious. CME’s future OI has exceeded Binance. If mainstream coins are increasingly trading in compliant trading venues due to tradfi entry, and meme can also pump out more than 1b projects on the chain, thenIs Binance’s space being squeezed?
In addition to Offshore CEX, how can those market makers who used to rely on crypto to break through when they see Wall Street’s high-frequency quantitative teams bringing infra and funds into the market? With their decline, the presence of third-party financial institutions that serve them is alsoIt is getting weaker, let alone VCs who cannot actively trade.
This polarization and liquidity squeeze are the fundamental changes in our industry.Whoever finds the breaking point can win.
Second, what exactly is wrong with VC Token
I understand the market’s sentiment towards VC tokens very well.The project has a super high FDV opening. After it is launched, it keeps unlocking and smashing the market to make profits. Since it is all casinos, why not go to a more fair casino and play meme pvp? If you lose, you can only blame me for slow hand speed, rather than helping.Billions of US dollars of VC coins were taken over.
What is the essence behind this problem?There is something wrong with our industry’s liquiditysupply chain.
Why can Solana continue to ATH? Because they have real products, and the products can make Sol-based money continuously, so the user community is converted into trading community, and the positive flywheel of the two has become a kind of self-fulfilling prophecy. This isThe key to forming buypressure.
The same is true for the last cycle’s defi. The product is launched with micro-innovation and fun, and the dex creates liquidity and continues to discover value. When the consensus between the product community and the currency speculation community is formed, CEXlisting will further release liquidity, and projects, communities and CEX will realize the common sense.win.
A healthy ecosystem is: those who play on the chain are willing to buy coins, and even more willing to preach, and this liquidity supply chain has entered a positive cycle.
And now? The problem that VC token encounters is the separation of these two communities. TGE was just launched on the main network, and the products were not implemented at all. Community was all for airdrops, and all brought were selling orders; and the previous CycleWe also have Sam/Su to help us leverage and buy Alt, but this Cycle leverage has basically been cleared; at the same time, many VCs raised a large amount of funds in the last bull market, and there was pressure to set up a layout, and in order to see the beautiful books for LPThe return has to push up the valuation of the project in rounds.
This has created the current situation of VC Token. The high valuation opened and there was no buying. What else can I do besides falling?
This naturally allows us to understand the logic of the emergence of meme. Since the projects invested by VC cannot be implemented, why not speculate on air-related issues with low valuations?
3. Meme has become the most unignorable track-level opportunity in our industry.
Under the polarization analyzed at the beginning of the article, Meme has become one of the most important tracks in our industry.
I always thought Meme was pure speculative, but it was not until this time that I realized that I was wrong. It is a carrier that carries cultural thoughts. Its value does not lie in its specific functions and technologies, but in its collective consciousness, emotions andThe unique ability to identify is no different from the logic of religion.Beneath the absurd surface, it expresses profound social psychological needs and values.What it does is to productize and capitalize thoughts and emotions.
In other words, its product core is the thoughts and narratives it carries, and the size of these thoughts and narratives determines the ceiling of a meme.Pioneer Technology, idol worship, IP emotion, and subcultural thoughts. When we analyze the potential behind it, it is exactly the same as VCs analyzing the prospects of a product’s track and the track position they are located.
For Meme token is its product.So what it needs to do around products is to promote prices and communities, Price is the iterative development of products in a sense, building a solid community foundation in the price, turning paperhands into diamondhands, allowing them to do communication, and finally completing self-fulfilling prophecies.
At this point, Memetoken actually has huge advantages that VC tokens do not have.Because token is the product itself, the product community and the currency speculation community are combined into one, and the two form a joint force.
Because the issuance capital is too low, the investment signal-to-noise ratio is very low, and it cannot be analyzed from the tangible product form. It requires a taste that has a good understanding of thoughts and market sentiment. I am still working hard to learn whether it is structured.To study this track, we can choose the bid in a very low signal-to-noise ratio. If so, what kind of bid is suitable for us to intervene and when.
But I really believe that Meme will become a cross-cycle opportunity because it is essentially a cultural phenomenon in the digital age, and the immortal emotions iterate will never dry up.
More importantly, I always feel that giving marginalized people the opportunity to get rich is the vitality of our industry.Before this wave of meme, it was said that this cycle’s requirements for entrepreneurs are more than ten times that of the past, and investment seems to have been eaten up by VCs, and the emotions of the community and retail investors were greatly suppressed.But through meme, young people can achieve the opportunity of 100x through early ambush. Anti-authority is one of the most core spirits of crypto, and I believe it will always be there.
4. How long can Meme last in this cycle
When everyone is enthusiastic about the fact that they can sacrifice their lives for the community and make money forever, don’t forget that the profits will definitely be harvested. This is the unchanging end of the financial industry.Think about it again if NFTcommunity was like this back then: Everyone takes pride in using monkey avatars, helps them contact the brand, organize activities and join forces everywhere, and NFT Party is open all over the world, and then what?
When all kinds of inflated self-confidence and unrealistic expectations appear, when it feels that holding Maior is worse than holding Meme, when various hackers and Rugs appear, we should start to be vigilant.Once our industry does not have greater liquidity opportunities, BTC begins to encounter resistance, and all enhanced versions of Alpha will fall faster.
By the way, is DeSci exactly the same as the last cycle PeopleDAO and the logic of saving Assange? Under the name of “justice”, do we have the ability to distinguish beliefs and speculation.
In fact, a huge turn of meme happened when Binance went to Neiro. At that time, VC token was in trouble. The opportunity to break the situation was to discover that Neiro was to embrace communitymeme and let the project, community and CEX users make money, so there wasACT.
But now the blind liquidity of memes on the chain is not like the competition of TVL after Binance launched the high-TVL project at that time, and is not like the competition of TVL after Binance launched the Ton ecological currency with huge user base.
Based on market expectations, CEX will change its currency listing strategy, thereby guiding the market direction. Our industry will inevitably fall into a chaos of homogeneous competition due to the low asset issuance cost and liquidity premium. Everyone will be numb and tired of this chaos..
This is the power of the cycle.
In small cycles, don’t do whatever you support for bet CEX. Projects that are really building for the industry will definitely come out.
In the big cycle, when the bear market comes, the oversupply will be cleared by the market and then the market will be back on track.
The market will always sway in the construction of long-termism and short-termism emotions. It is a spectrum. Main Character and Meme will become both ends of Barbel, and as market sentiment increases and decreases.
No need to worry, just find your own rhythm.
Investing is such a game. We make judgments based on our cognition and make bets. We will review the mistakes when we make money and make mistakes. We will always be curious and always be respectful.
